Inconsistent Regulations Killing Australia’s Construction Sector

Imagine for a moment you were trying to run a large international city with a metropolitan population of 20 million people or more.

Would you divide that city into eight separate jurisdictions and have each adopt its own different rules and processes for builder registration, trade licensing, planning and building approvals, environmental assessments, building contracts legislation, consumer protection and occupational health and safety?

Would you force plumbers licenced in one part of the city to navigate up to eight different sets of rules and processes for licensing in order to operate in other parts of the city? How about draftspeople? Would you require these to be registered in some jurisdictions but not others?

Or would you create one set of consistent rules and processes across the city?

The answer is obvious. Yet, in Australia, builders and tradespeople are forced to grapple with eight different systems for almost every facet of regulation which impacts their business. In one state, a residential builder might be able to construct a 25 square metre pergola without approval; in another state, it might be 10 square metres. Domestic builder contracts, consumer protection and warranty regimes and dispute resolution systems all differ from state to state. Even the terminology is different: a building approval is referred to as a ‘construction certificate’ in New South Wales, a ‘building permit’ in Victoria and a ‘development approval’ in South Australia.

Beyond that, there is the plethora of rules at the local council level. One builder in a recent focus group conducted by the Master Builders Association complained of having to deal with more than 50 different councils, each one of which has a different set of application paperwork, documents, fees, contributions, building controls, cut and fill policies, storm water policies and tree preservation policies.

In one case, according to Richard Calver, national director, industrial relations and legal counsel at Master Builders Australia, a builder performing a straightforward ‘drop and go’ concrete pour taking around 20 minutes for a residential extension within a major city had to expend what is understood to have been around $1,200 worth of cash and time to organise a road management plan and a traffic controller (even though the job was in a quiet back street), obtain a permit and complete a plethora of paperwork. Had the job have been on the other side of the street, which was in another council area, none of this would have been necessary and the truck would have turned up, made the delivery and been on its way.

In qualifications and registration, too, whilst the Mutual Recognition Act 1992 generally allows those licensed in one jurisdiction to operate at their equivalent level elsewhere, nuances arise. In Victoria, a licensed building surveyor can be all things to all people; in New South Wales, three different grades apply. An unlicensed draftsperson legally operating in Albury, on the New South Wales southern border, would be breaking the law by driving across the bridge over the Murray and completing a job in Wodonga in Victoria, where licensing is required. Despite harmonisation of occupational health and safety rules, builders in the ACT are unable to remove even small quantities of asbestos despite being required to undertake a course in asbestos identification.

Even in the one area where national harmonisation has been achieved – the National Construction Code – a number of councils over the years have tried to add on requirements for increased minimum ceiling heights, greater water and energy efficiency and larger room sizes.

The impact is significant. In the residential sector, for instance, anecdotal evidence from builders suggests the burden of regulatory fees and compliance adds between eight to 12 per cent to the cost of building an average Australian home, Master Builders Australia reckons. Some top-tier builders have staff in each state specifically charged with navigating regulatory processes in that jurisdiction, which is wasteful. Challenges associated with the differing licensing regimes make it more difficult for companies to transfer workers across projects in different states and for skilled labour to migrate from areas where demand is soft to those where their skills are more needed. In one case, a large multi-national electrical subcontracting outfit spent several months obtaining cross jurisdictional registration for their builders and engineers for a major broadband contract even though the requirements were largely duplicatory.

Housing Industry Association senior executive director of building, development and the environment Kristin Brookfield says the impact of all this cannot be understated, especially at the smaller and more fragmented end of the industry and particularly when it comes to older builders.

“There are member of ours who we speak to who call us up and say ‘I need to understand this process,'” Brookfield explained. “When we have that conversation with them – particularly older builders- they talk to us about how hard it has become and that they are considering turning in their toolbelts.”

Others say the situation is farcical.

“When I talk about the Australian regulatory landscape, I talk about the eight countries of Australia.” Professor Kim Lovegrove FAIB, a partner at construction and planning law firm Lovegrove Smith and Cotton and Conjoint Professor of Building Regulation at the University of Newcastle says. Renowned construction guru David Chandler OAM, meanwhile, says Australia’s fragmented ‘8 + NZ market’ is ‘unsustainable and uncompetitive’ in a world of changing technology and building systems.

What can be done? To address local issues, Master Builders is calling for a My Council website, similar to those in place for schools and hospitals. The site would feature key performance indicators on local councils such as the time taken and costs charged to approve a standard development applications as well as the amount of ‘developer charges’ they impose for new residential developments and all local variations to the National Construction Code, including why these variations are in place and how much they add to the cost of new housing.

Lovegrove would like to see more conversation about harmonisation through the Australian Building Codes Board, which has responsible ministers from each jurisdiction on its board. HIA’s Brookfield wants prohibitions on local planning requirements which add to the BCA.

Still, there are few signs of any major significant forms of momentum when it comes to replicating the type of progress that was achieved through the BCA in other areas.

The eight countries of Australia are costly and inefficient. But for now, it looks like they are here to stay.